Print Reports Snow Readers On Housing

The front page of the December 27 Investors Business Daily (IBD)
joined other print outlets in blowing hot air on the so-called
housing bubble with Home
Sales Plunge as Prices Pull Back and Supply Swells, as reporter
Kirk Shinkle painted a chilly winter landscape for the housing
market.

A few days earlier, a December 23 business report by
the
Associated Press similarly saw evidence of a slowdown while
Bloomberg News blamed the report for cooling off a stock market
rally. In the rush to hype the drop in November sales, Shinkle, the
AP, and Bloomberg didnt remind readers of Octobers rapid run-up in
new housing sales, that the 2005 housing market is breaking 2004s
record sales, and that month-to-month figures can be misleading or
inconclusive about longer-term trends.

The
Washington Post reported a few days earlier on the 11.3 percent
drop in sales in November over October, but the December 24 article
also reported that Even with the dip in November compared with
October total new-home sales were still 6 percent above November
2004, according to the government figures. The Posts Kirstin
Downey added that at this rate, about 1.25 million new
single-family homes will be sold in 2005, up from the
record-breaking 1.2 million sold in 2004.

Yet while a record-breaking year for new home sales is
set to be eclipsed by yet another record-setting year for housing,
that was not the take from IBDs Shinkle, who wrote that, New-home
sales posted their worst drop in 11 years. He further cautioned
that [a]side from happy shoppersFridays economic reports looked
less than merry.

Shinkle cited the same projected 2005 new-home
statistic Downey used, but spun it in a negative direction, writing
that in November, new-home sales felt winters chill, diving 11.3 %
to a 1.245 million annual rate, the slowest pace since January.

The IBD report was not the only print outlet to pour
cold water on Octobers hot housing market. An Associated Press
report from four days earlier sounded an equally alarming note,
warning that the drop in sales was the most dramatic evidence yet
that the red hot housing market is beginning to cool down. The AP
noted the months decline was even bigger than the 8.7 percent
drop-off that Wall Street had expected. The Christmas Eve edition
of The New York Times, meanwhile, carried a
Bloomberg News brief that attributed the end of the stock market
rally in part to the housing report.

Yet a month prior, The Washington Posts
Sandra Fleishman reported on government figures showing sales
for October 2005 had leapt 13 percent over September, a monthly
increase not seen in a dozen years, according to a government
report. In her November 30 report on the October numbers, Fleishman
voiced caution from unnamed experts, noting that the unexpected
burst of activity in sales of new homes, particularly a 47 percent
rise in sales in the West, could be an error in reporting, adding
that experts say, monthly new-home statistics are volatile and
often subject to revisions.

Shinkle hyped one months aberrant statistics to hint
at a housing bubble burst and warned new home building might only
add to a growing glut on the market. That is only the latest
example of the media eagerly misreporting the news to forecast a
housing bubble burst which has not yet happened, despite four years
of doom-saying. The Business & Media Institute placed the housing bubble
myth as number five in its year-ending list of the
Top Ten Economic Myths of 2005. The November 30Business & Media Institute study on housing bubble coverage is also available at
FreeMarketProject.org.

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